Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 212.33

+1.1%

Nov 28 9:30 AM EST

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To: Gary Korn who wrote (26778)	12/7/1997 9:31:00 PM
From: Roadkill	Read Replies (2) of 61433

I would disagree strongly if ASND instituted a share buy-back program. Even if ASND spent every penny of its $500 MM in cash, and bought the stock at $25/share, we're only looking at 20 MM shares. That's about 10% of the float. That would make the EPS increase about 11% (current EPS / shares left after buyback). Even with a slight PE expansion, you're looking at a 15% increase in the stock price, tops. Not exactly something to write home about. We would be left with a company with little or no cash, which would, in turn, possibly affect its market value negatively. It would no longer have a strong balance sheet. Companies with cash survive economic downturns. Those without don't. Technology is a cash-intensive business. To stay ahead, companies must be sinking their resources into R&D. If ASND had to blow a wad, I would rather see them spend it there. In fact, I was pleased to hear in the 3Q conference call that ASND would be increasing R&D. That's what will bring us back. Just MHO. Matt

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